Partial spin-offs of real estate activities may qualify for tax neutrality

Companies operating with mixed business models, combining commercial activity with real estate asset management, have a way to carry out structural reorganizations without them causing an immediate tax impact. The Directorate General of Taxes (DGT) has clarified the requirements for a partial spin-off of a branch of activity to benefit from the tax neutrality regime.

What the DGT has resolved

The ruling analyzes whether a set of real estate assets, intended for leasing and including industrial warehouses partially used for commercial activity, can be considered an autonomous branch of activity. The administration's criteria establish that a partial spin-off is compatible with the tax neutrality regime provided that three conditions are met:

• Economic autonomy: The segregated assets must constitute an economic unit capable of functioning by its own means.
• Continuity of activity: The spun-off entity must maintain another branch of activity after the operation.
• Economic purpose: The operation must not have the primary objective of tax fraud or evasion.

Furthermore, the DGT points out that the existence of mixed-use properties does not prevent the spin-off, provided that the original commercial activity can continue under similar conditions, for example, through the leasing of the segregated space.

What this means for you

For companies seeking to separate their lines of business, this resolution offers legal certainty in reorganization processes. If a company wishes to segregate its real estate asset portfolio from its commercial operations, it may do so without the operation being immediately taxed under Corporate Income Tax (IS), provided that the segregated part is an independent operating unit and the parent company retains its main activity.

What should be done

Before proceeding with this type of spin-off, it is necessary to conduct a technical analysis demonstrating the autonomy of the branch of activity to be segregated. It must be proven that the resulting economic unit can operate independently and that the commercial activity of the spun-off company is not interrupted, but rather adapts to the new asset structure.